If you are considering seeking out your financial advisor for some guidance about where to invest, make sure that you speak to him or her alone.
Researchers have found that if advisors are facing a financial conflict of interest they will nonetheless endeavour to give unbiased advice to an individual. However, when advising a group of people or giving advice to anonymous customers they are more likely to give a biased opinion.
Academics Sunita Sah a post-doctoral researcher at the Fuqua School of Business, Duke University and George Loewenstein a professor of economics and psychology at Carnegie Mellon University believe that when dealing with an individual a financial advisor is more likely to feel empathy for that person - something which fades when faced by a group of people.
The researchers ran a series of experiments in which advisors were paid to give advice and in some cases paid more if they over-estimated the results of one test. They were also in some cases told the names and ages of the investors and additionally some advisors spoke to a group of people whereas others only advised a single individual.
The advisors tended to be more sympathetic towards the individuals when they knew something about them and also to give more balanced advice to an individual. This was not the case when the advisors were dealing with groups of people with whom they had no empathy.
Mr Sah says the research sheds light on the advice stock analysts gave to investors during the dot-com boom. "In all of these cases these advisors were giving biased advice to large numbers of investors who were anonymous to them, so the damage they were causing had little reality for them."
The research is published in this month's issue of Social Psychological and Personality Science.
And still on the subject of finance, if you are making a financial decision you might find that your decision is more rational and rewarding if you think through the problem in a language other than your native tongue.
Although individuals are naturally loss-averse researchers have found that if they have to make decisions in a language that is not their mother tongue they are more inclined to take take favourable risks.
"A foreign language provides a distancing mechanism that moves people from the immediate intuitive system to a more deliberate mode of thinking," says Boaz Keysar, a psychologist at the University of Chicago who also teaches on Chicago Booth's executive education programmes.
In the paper "The foreign language effect: Thinking in a foreign tongue reduced decision biases," co-authored by Sayuri Hayakawa and Sun Gyu An, graduate students at the University of Chicago, the writers tested native English speakers who were proficient in Spanish. They ran a series of test in which the participants could win money on the toss of a coin. Prof Keysar found that when the test was run in English the participants "thought myopically" and were more focused on the fear of losing the bet and only accepted the bet 54 per cent of the time. However when the same test was run in Spanish this figure increased to 71 per cent.
The writers suggest that thinking in a foreign language could be beneficial when it comes to making decisions in a business setting.
"People who routinely make decisions in a foreign language might be less biased in their savings, investment and retirement decisions as they show less myopic loss aversion. Over a long time horizon this might very well be beneficial," say the writers.
The paper is published in the current issue of Psychological Science.